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February 4, 2009 - An amendment added to H.R. 786 could offer extended time to replenish the credit union share insurance fund at a time when the National Credit Union Administration (NCUA) is considering an insurance premium.
The amendment would extend the time period that the National Credit Union Share Insurance Fund (NCUSIF) can replenish its fund to five years. Currently, the Federal Credit Union Act requires replenishment in the same year if the fund falls below 1.2 percent. The Federal Deposit Insurance Corporation is allowed five years to replenish its funds, and a provision in the bill would extend that time period to eight years.
H.R. 786 would also make permanent the current $250,000 insurance coverage in credit union shares and bank deposits. The Emergency Economic Stabilization (EESA) Act of 2008 set insurance coverage at $250,000 for credit unions and banks with an expiration date of December 31, 2009. The bill was approved by the House Financial Services Committee on February 4.
Last week, the NCUA took action to stabilize the corporate credit union system by infusing $1 billion into U.S. Central Corporate Federal Credit Union from the NCUSIF. As a result of this action, an insurance premium will likely be assessed on natural person credit unions. If H.R. 786 is signed into law, the NCUA will have five years to replenish the fund rather than the same year.
As H.R. 786 moves through Congress, NASCUS will provide updates.
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